Yahoo! CEO Marissa Mayer's bold move to buy online blogging forum Tumblr for $1.1 billion was announced on Monday as she tries to rejuvenate an Internet icon that had fallen behind the times.
The deal is Yahoo!'s most expensive acquisition since the California company bought online search engine Overture a decade ago for $1.3 billion in cash and stock.
Yahoo'!s board of directors agreed on Sunday to buy the wildly popular blogging platform from the 26-year-old founder David Karp.
The deal for Tumblr, which boasts 100million users and 90million posts per day, was struck for $1.1billion cash.
Scroll down for Marissa Mayer's GIF
Done deal: Tumblr CEO David Karp (pictured left) has sold his blogging platform for $1.1billion cash to Yahoo! in a deal orchestrated by CEO Marissa Mayer (right)The deal makes Karp, a native New Yorker, the latest 20-something tech tycoon, even though he was publicly opposed, even just last year, to selling the company he founded out of his mother's small Manhattan apartment in 2007.
On Monday morning, Mayer publicly announced the purchase of Tumblr with a post on her own Tumblr page - including an animated GIF image that acknowledged the public questions about the acquisition.
Her first words about the deal were: 'We promise not to screw it up.'
More... 'I cry at work': Facebook's Sheryl Sandberg says it's okay for women to share their emotions in the workplace A Facebook of two halves: Lives of Mr and Mrs Average charted online show how women discuss TV at 44 and men lose interest in their careers at 30Mayer announced that Karp will stay on as CEO of Tumblr and continue to run and develop the site.
Despite a massive user base, Tumblr's revenue was only $13million last year. Even that figure was only made possible after $125million in capital investments.
The deal also faced almost immediate backlash from Tumblr users, who feared Yahoo!'s ownership would change the character of the site and water down the features that make it successful.
Mayer sought to allay concerns on both sides - and even used an internet meme to make light of the criticism. The GIF she posted reads: 'Yahoo. Tumblr. Now Panic and Freak Out.'
Rich man: David Karp, who founded Tumblr in 2007 in his mother's Manhattan apartment, just made hundreds of millions of dollars after his company was purchased by Yahoo Moving on up: Karp lives with his girlfriend Rachel Eakley, a graduate student and chef, in a modest apartment in Manhattan's West VillageInstead, Mayer urged users and Yahoo! investors alike the 'Keep Calm and Carry On' - a reference to a famous British propaganda poster produced during World War II.
Tech news site AllThingsD reports that Mayer, who took over as Yahoo! CEO in July, wanted to quickly snatch up Tumbler as 'the stake in the ground of what her strategy is going forward for Yahoo!.'
Tumblr, which is a mico-blogging platform for quickly posting pictures, text and video, also functions as a social media site.
Its platform manages to blend elements of all of the major social networking sites. Sharing and posting photos is simple and easy, like Instagram. GIFs and videos are all easy to share, as well. But, the site also has a new feed function, allowing users to follow other Tumblr blogs like social media networks Facebook and Twitter.
The simple layout of Tumblr has spawned millions of diverse, quirky, blogs. An enormously popular Tumblr called '#whatshouldwecallme' features a series of animated GIFs explaining the reactions to daily life of a 20-something woman.
Miss Eakley has been Karp's constant companion at public events for several yearsHowever, celebrities like Joe Jonas and Lady GaGa also have popular Tumblr pages and companies like the shoemaker Cole Haan use the site as a creative way to market their products.
Tumblr is also popular with many porn stars and features numerous sexually-explicit blogs.
Tumblr boasts remarkable loyalty among its users. Some 85percent of Tumblr users make 20 or more posts a month.
Mayer cited some of these facts when addressing critics who worried Yahoo was paying too much for a company that has yet to turn a profit.
In her Tumblr post, she wrote: 'The combination of Tumblr+Yahoo! could grow Yahoo!’s audience by 50% to more than a billion monthly visitors, and could grow traffic by approximately 20%.
'In terms of working together, Tumblr can deploy Yahoo!’s personalization technology and search infrastructure to help its users discover creators, bloggers, and content they’ll love.'
She also addressed the fears of Tumblr users, who threatened to leave the service in droves or to otherwise protest the takeover.
'Tumblr is incredibly special and has a great thing going. We will operate Tumblr independently. David Karp will remain CEO,' Mayer wrote.
'The product roadmap, their team, their wit and irreverence will all remain the same as will their mission to empower creators to make their best work and get it in front of the audience they deserve. Yahoo! will help Tumblr get even better, faster.'
Very young and very rich: Karp and Eakley, who enjoy spending their Sunday mornings at brunch in Manhattan's East Village, are now due for a major lifestyle changeHowever, Karp - a high school dropout who taught himself how to code - had expressed grave reservations about giving up his brainchild to a Silicon Valley tech giant.
In a 2012 interview with the Guardian, he said he had been swatting away buy-out requests for years.
'Particularly in the first three years, there were a lot of (mergers and acquisitions) people who would pull you aside and you'd think "Well, s***, I could be a pretty rich 23-year-old with very little effort,"' he said.
'We stuck it out. I won't say I really knew why.'
Perhaps the perseverance makes sense to Karp now that he is 'very rich' at age 26.
The deal conjures images of another young man who is very rich - Facebook founder Mark Zuckerberg.
At $1.1billion, Tumblr's worth is nowhere near the value of $100billion Facebook, but 29-year-old Zuckerberg's success has become something of a pattern for young, brilliant tech entrepreneurs.
It is unclear how large a stake in the company Karp maintained before the Yahoo deal.
In 2008, he sold a 25percent stake to investors for $750,000.
The investor share of the company was $125million at the time of the deal, according to AllThingsD.
Karp grew up on Manhattan's Upper West Side, the son of a music composer father who wrote songs for films and TV shows and a mother who was a teacher.
Unlike the famously-dressed-down Mark Zuckerberg, Karp prefers wearing plaid instead of a hoody. But he's not afraid to wear a suit, either.
He taught himself how to code HTML at age 11 and began setting up his own consulting business shortly thereafter. His parents allowed him to drop out of high school at age 15 and complete the remainder of his education by homeschooling.
At age 17, he moved to Japan, where he cemented his skill as a programmer and began pitching his ideas to tech companies.
He moved back to New York and sold his services as a consultant. He founded Tumblr in 2007 at age 21 - and it quickly consumed all of his time.
He started up an office in Manhattan and has ardently resisted the lure of moving to Silicon Valley. He also tried to resist the money that the tech world had to offer.
He told the Guardian that he wanted to remain independent - believing he could grow the company by growing ad revenue naturally.
Within a year, though, he was accepting funds from venture capital investors.
He currently lives with his girlfriend in a modest apartment in Manhattan's West Village. Rachel Eakley is a chef and a graduate student studying psychology.
